Winston Company_Incremental analysis

profileaccountguru
 (Not rated)
 (Not rated)
Chat

 

WinstonCompanymanufactured5,000 unitsofacomponentpartthatisused initsproductand incurredthe followingcosts:

 

Directmaterials

35,000

Directlabor

25,000

Variablemanufacturingoverhead

20,000

Fixedmanufacturingoverhead

18,000

 

98,000

 

Anothercompanyhasofferedtosellthesamecomponenttothecompanyfor$17.50 perunit.Thefixed manufacturingoverheadconsistsmainlyofdepreciationonequipmentused tomanufacturethepartand wouldnotbereducedifthecomponentpartwaspurchasedfromtheoutsidefirm.Ifthecomponentpart is purchasedfromtheoutsidefirm, WinstonCompanyhastheopportunitytouse thefactoryequipment

toproduceanotherproductthatisestimatedtohaveacontributionmarginof$19,000

 

Instructions

 

Prepareanincrementalanalysisforthismakeorbuydecision.Shouldthecomponentbemadeor purchased?

    • 10 years ago
    Winston Company_Incremental analysis
    NOT RATED

    Purchase the answer to view it

    blurred-text
    • attachment
      winston_company_incremental_analysis.docx